What happened
Electric vehicle (EV) sector stocks have been a big focus as investors hoped a rising tide would lift all boats. But even as EV adoption grows, some companies aren't growing as much as investors hoped. That has led some to bail out of the more speculative companies and focus on expected winners. That played out this week as several money-losing EV stocks tanked.
EV charging network company ChargePoint (CHPT 2.81%), electric truck maker Nikola (NKLA +0.00%), and EV maker Polestar Automotive (PSNY 1.58%) all had dropped by double digits as of late Thursday afternoon. ChargePoint shares led the declines, down by about 19%. But Nikola and Polestar stocks were also sinking by 13.6% and 13%, respectively, according to data provided by S&P Global Market Intelligence.
NYSE: CHPT
Key Data Points
So what
ChargePoint surprised investors with earnings and guidance this week that didn't meet expectations. The company grew revenue by 94% in its 2023 fiscal year that ended Jan. 31, 2023. But in its fiscal 2024 second-quarter report, ChargePoint said it sees revenue growing only by 29% to 35% this fiscal year. Management believes it might not even see any sequential growth in the current quarter.
That comes as more and more EV makers are planning to adopt Tesla's North American Charging Standard (NACS) plug. The latest to do so is Honda Motor, which joins several major established automakers as well as early stage EV companies.
Now what
Polestar is one of those EV makers. The company is jointly owned by Volvo and that automaker's Chinese parent company, Geely. The drop in its shares this week was spurred by that company's own disappointing earnings report.
Polestar is ramping up its shipment volume, but it is still losing more money than it did last year. In the second quarter, it lost $304 million compared to $228 million in the year-ago period. Management still expects to produce between 60,000 and 70,000 vehicles in 2023, and it reiterated its 4% gross margin expectation for the year. But investors may be skeptical since it has only recorded a gross margin of 1.4% for the first half of 2023.
NASDAQ: PSNY
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The stock was also under pressure after Barclays analyst Dan Levy downgraded shares after the quarterly report this week. Levy now rates the stock a sell and lowered his price target to $3 from $5 per share. The analyst thinks its higher-end cars will be confined to a niche customer market that won't allow the company to become largely profitable.
That's also a criticism some investors have for electric heavy-truck maker Nikola. That company has already rolled out its battery-powered version, but it ultimately is planning on focusing on hydrogen fuel cell-powered trucks. The stock already took a hit thanks to a large recall of the battery electric trucks it has already produced due to a battery fire hazard. Now investors are wondering if there will be enough of a market for its future primary product.
OTC: NKLA
Key Data Points
If hydrogen isn't widely adopted as a fuel to be used in transportation, Nikola won't have much of a future.
The future of EV companies is what investors are focusing on now. And if there is a question whether one will succeed and thrive, it seems they are putting their money behind less speculative names now.
